FALCO’S INIMITABLE CHIEF

In an article published in The Northern Miner in late November, 1985, Falconbridge Ltd.’s Chairman Bill James reported that finally, following several rocky years, the company’s balance sheet was sound. And in an understatement that only he and a handful of others in the country could savor at the time, he added an innocuous postscript: the company, he said, now had the financial “flexibility to deal with the future.” That flexibility showed a month later — Falconbridge announced the purchase of Kidd Creek Mines from the government- controlled Canada Development Corp. (cdc) for $615 million in cash, convertible debentures and Falconbridge common shares. The deal had been quietly consummated during three days of negotiations at a suite in the King Edward Hotel in Toronto. The Kidd Creek purchase was a bold stroke for the Falconbridge chairman, chief executive and president who, at the time, had only recently endured a baptism by fire, dragging the nickel miner out of a recession and a prolonged spell of low commodity prices. It was a coup as well. Evidently, his former bosses at Noranda, with a minority equity stake in cdc, dearly wanted to add the rich base metal orebody to Noranda’s portfolio of producers. James, the accomplished operations man, had staked new ground as a boardroom dealmaker with moxie.

For public consumption, most ceos and company chairmen deliberately cultivate a genteel air and a kind of above-the-fray calm. Insurance company and bank chairmen must fairly ooze trust and solidity; their counterparts in mining less so, because of the perceived rough and tumble nature of the business.

Dr William James Jr. (known universally without the “Dr” tag as Bill James) is, well, different. In an age in which polish grows increasingly suspect (in politics, think of the disaffection Prime Minister Mulroney has engendered, partly because of his unctuous baritone delivery), James comes across as “real,” or uncontrived. He seems to have only recently been plucked from the controls of a jumbo underground and placed in the executive suite. (The trademark booming, gravelly voice may be the only one in Canadian mining that can rise above the din of a jumbo.) Former Falconbridge executives say James is very straightforward, tough, demanding, decisive and yet affable and easy to get along with if the performance is there. The word unconventional crops up. “He is a classic mix of energy and brains,” said Peter Richardson, a Queen’s University business professor and Falconbridge consultant. According to Lionel Kilburn, a former Falconbridge exploration v.p.,”he gets things done, and that’s really the object of the exercise.”

James was born in 1929, the year of the great Stock Market Crash. He is the son of a distinguished geologist, William Fleming James. The elder James, with a PhD from Princeton, labored for the Geological Survey of Canada (gsc) before pioneering geological investigations into the great Labrador iron ranges. (His accomplishments range far beyond that, but this is his son’s story.) Of his decision to trace his father’s route into mining, James said: “My dad was in it and he seemed to do all right. So I got into it.”

He received a bachelor of arts and a master of arts in geology at the University of Toronto and earned a PhD at McGill University in 1957. During university, field experience came from working with the Iron Ore Co. of Canada, the Ontario Dept. of Mines, the gsc, a Mexican base metal producer and an American oil company. After post-graduate studies, he signed on with Rio Algom Ltd., at the height of the Ontario uranium boom, as a geologist and later as a miner at Rio’s Nordic mine. “The geology wasn’t paying off that much,” he explained of his move to work a jack leg. “It was good exerci se and you got an appreciation for those guys (miners).”

He hasn’t lost that appreciation. A former executive of Falconbridge says James is “very, very close to operations. He recognizes that as the lifeblood of the company. He likes talking with mining engineers and metallurgists.” The two-year stint at Rio Algom was followed by a brief stay at Kerr Addison Mines as a geologist before joining his father’s consulting firm, James, Buffam & Cooper, in 1961.

He truly cut his teeth in mining while consulting, evaluating for client banks the feasibility of mining at Lornex, Endako, Cyprus/Anvil, Gibraltar and Kam Kotia, to name a few. By 1967, he was a full-fledged partner in James, Buffam & Cooper. Directorships followed in the late 1960s in Noranda Mines and the Canadian Imperial Bank of Commerce. James clearly was on the fast track. “You’ve got to give a little credit to Dad,” the younger James said of his fast rise. In 1973, he took a step that led away from consultancy and towards the eventual presidency of Falconbridge. That year, he was handed the mantle of president of Kerr Addison Mines, a Noranda subsidiary. A year later, he was appointed executive vice-president of Noranda, a position, he said, he relished. “They were a great bunch of people and it was a helluva company.” By 1982, when he was firmly entrenched as a Noranda v.p., with the additional duties of overseeing the Brunswick operation, he received overtures from the U.S.-based Superior Oil Co. With the biggest single equity slice in Falconbridge, Superior was casting about for a new Falco president. James said he turned them down at first, even before the issue of salary was raised.

“I was reluctant to leave Noranda, so I turned them down the first time because I liked what I was doing. I was in charge of all Noranda’s mining, smelting and refining operations. I didn’t even ask them (Superior) what they were offering.” Superior, however, persisted, offering James a compensation package he simply couldn’t ignore. James finally accepted, knowing that he had a “pretty sporting chance” of becoming the company’s chief executive officer and its new chairman.

However, Falconbridge in 1982 was in deep, deep trouble. It had borrowed to the limit of its covenant with debenture holders and was losing money at the rate of $2 million every week when he climbed aboard, James told The Northern Miner Magazine. Internal company projections revealed catastrophe ahead — by November, 1983, the company would be out of business. The final loss at year-end 1982 — $88 million — was the worst in the company’s more than five decades of operations. So James wielded the axe, cutting the Sudbury workforce (2,230 workers today from a 1982 force of about 4,000) and head office staff, reducing head office floor space in the Toronto tower to a single floor from the previous 3 1/2 and selling off the Gulfstream II that had flown Falconbridge executives to operations in Norway, the Dominican Republic and Canada.

“It was a touchy situation,” James said. “Around here (head office) 40% of the people left. So it was difficult. Those things had to be done if we were going to survive.” The drastic cost reductions and improving nickel prices staved off extinction. In 1983, losses were about a third of the bleak 1982 results and, in 1984, the company reported a respectable $28.6-million profit. Falconbridge was given more manoeuvring room when long- term debt as a percentage of shareholders’ equity started shrinking. (It should be noted that during James’s tenure, the company has sold $980 million in new equity.)

Then came the Kidd Creek purchase and more debt. So he sold off assets — Kiena Gold Mines for $87 million; Corporation Falconbridge Copper, $120 million; Western Platinum, $75 million; and Giant Yellowknife and Akaitcho Gold Mines. He didn’t particularly endear himself to Kidd Creek workers when he cut the workforce at the operation. That action served to confirm the fears workers had when Falconbridge first took over the mine and metallurgical plant. A few noses were out of joint at the Timmins operation, James admits. But this had to be done, because nickel prices had again fallen in 1986 and Falconbridge was headed for another net loss.

Profitability returned in 1987 and, with it, a successful debt reduction program was implem
ented. Today, Falconbridge is financially sound, and it’s making money thanks to the outrageous prices nickel is fetching. (At the time of writing, the one big question mark was that errant block of stock that Placer Dome was trying to unload. Would Noranda finally get its hands on Kidd Creek through an approximate 24% stake in Falconbridge? Could James somehow secure the block? Who might come out of the woodwork to bid?) These questions aside, the energetic James is gleefully rolling along. He recently settled a thorny and potentially devastating tax dispute with the government of the Dominican Republic.

During the interview with The Northern Miner Magazine — in the midst of which he nailed down the tax agreeement over the telephone with the Dominican government — James proved less than eager to discuss his personal life. But he did reveal that he and his wife have six children. They live in Toronto. He loves skiing and, in summer, escaping to the family cottage on Georgian Bay.

It’s said that at work he runs a tight ship, but with such raw energy that he ensures that it’s a lively one. That may be because he obviously relishes his work. After the final phone call that afternoon to the Dominican Republic put the finishing touches to the tax agreement, James hung up smiling broadly, almost glowing, and points to the phone. “Where else can you get a bang like that? It’s just like playing with stuff. It’s like a game. There’s a lot of real purpose to it, but it’s fun.”

If the Dominican tax deal was fun, winning Kidd Creek must have been nirvana. — 30 —